India Holds Parleys on Foreign equity in e-Commerce

Should India allow foreign equity in its e-commerce space that is estimated to touch $16 billion this year? This was the topic of discussion at a meeting held by Commerce Minister Nirmala Sitharaman with top industry chambers and stakeholders here on Thursday.

No decisions were taken, even as the domestic industry felt e-commerce was still a nascent market in India and should be allowed to mature a bit before foreign giants are given an entry into this fast-growing business.

"We are not taking any position this way or that way from the Ministry. We have heard everybody. In fact, this is not going to be sufficient," Sitharaman said after the meeting, which was attended, among others, by industry chambers CII, Ficci and Assocham, as also leading e-commerce players Flipkart and Snapdeal.

"I will need to hold more meetings with everyone -- individual operators and association. I may also have meetings with state governments. I have to understand what position they have taken, since it is important to know each case -- what is the issue," the minister said.

India currently allows 100-percent foreign equity in the e-commerce space only for business-to-business transactions, and not for business-to-consumer space. But there are some loop holes as well and global giants like Amazon and e-Bay want clarity in the policy.

Sitharaman said she is also considering meetings with some state governments on the matter.

"I may have meetings with state governments also to understand how they have taken a position because it is important for me to know in each of these cases what is the issue," she said.

The minister said stakeholders raised issues related to taxation, definition and inclusion of e-commerce within the framework of the domestic trade policy.

Representatives from industry organisations CII, Ficci, Nasscom, the Confederation of All India Traders, and companies such as eBay, Snapdeal, Decathlon, H&M, and Ikea attended the meeting.

Within the industry, the views were more or less similar -- but for the finer nuances.

"It is critical to understand that within the e-commerce space there are two models of operations -- inventory-based and market place," said a statement from Ficci, adding that allowing foreign equity in both would put Indian industry on par with other emerging markets.

"As the policy is reviewed, it is important to focus on development and encouragement of micro, small and medium enterprises sector, which is certainly the driving force behind the vision of 'Make in India'. This should ensure domestic manufacturing gets impetus," it said.

"Ficci feels that foreign direct investment should be allowed in the B2C e-commerce, with a focus on sourcing from manufacturers and in a phased manner. The idea is to emphasize that there has to be a parity between online and offline retail policy with respect to foreign equity levels."

The Confederation of Indian Industry (CII) was a little more direct.

"While CII is favourably inclined towards 100 percent foreign equity in foreign equity in B2C route, the sector should given some time to come to a level where it can compete globally," the chamber said, adding that e-commerce in India was at a relatively nascent stage.

Its recommendations included ensuring a level playing field for all stakeholders, safeguards to Indian players such as mandatory local sourcing, privacy, safety against tax-evasion and checking e-wastage and no differentiation in the policy based on selling models or on the basis of goods and services.

Source: IANS